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Competition Helps With Spectrum

With the release of the new iPad, plans for the next iPhone, and more Netflix and data intensive streaming on mobile devices, the need for more broadband spectrum has never been greater. While major wireless carriers like AT&T are exploiting growing demand with price hikes and data caps, smaller mobile phone companies are actually more starved for spectrum.

What would really help the situation longterm, though would be developing ways to get more spectrum to those who would really deploy it to customers. How quickly we can download something on our smartphones – and what we pay to do it will soon be impacted by upcoming government decisions on everything from fostering interoperability between the Bells and their wireless rivals to whether the Verizon/Cable deal is approved.

Congress has taken positive steps to help with the spectrum crunch by authorizing the FCC to auction underused TV broadcast spectrum for wireless Internet use, as has the FCC with its decision late last year to deny the AT&T takeover of T-Mobile. We have all learned that more competition encourages companies to make better decisions for customers – like not warehousing spectrum and innovating new technologies and services that use spectrum more efficiently.

But there have been setbacks to boosting broadband competition too. LightSquared’s planned nationwide 4G LTE network would have utilized unused satellite spectrum, and its wholesale business model would have given its 30+ partners, many of them rural and local wireless carriers, a path to deliver advanced mobile broadband services and compete with the nationwide carriers. Unfortunately, the FCC’s recent decision to revoke waivers it granted Lightsquared after political pressure from its well connected competitors and questionable studies on GPS interference has again delayed that option.

Lightsquared has discovered ways around the original problems with GPS interference, but political manipulation and delay by entrenched special interests and competitors are harder to solve. We have seen this before. New disruptive competition is good for the economy and the public, but loathed by entrenched interests.

Some incumbent providers appear to revel in broadband scarcity and want to adopt a business model based on profiting from scarcity – rather than helping to create abundance. Companies face pressures from stockholders who may not share a forward-thinking “if you build it they will come” philosophy. Verizon was not exactly rewarded by Wall Street when it invested in and began to build FiOS.

Verizon has been particularly proactive, and until recently said its spectrum needs were met until at least 2015. However, many of Verizon and AT&T’s smaller competitors are spectrum starved. So there is concern about Verizon’s plan to buy spectrum from highspeed cable competitors and collaborate on new unmatchable quad plays of landline voice, Internet access, video and mobile wireless. Some worry the deal will not only eliminate the prospect of additional competition, but also give some of the last useable spectrum to the largest, spectrum-rich incumbent — rather than getting spectrum to smaller carriers, which desperately need it and would deploy it more quickly.

If the FCC is going to meet its goal of boosting spectrum by making 500 MHz of spectrum available for mobile broadband over the next decade, as outlined in its National Broadband Plan two years ago, more must be done. In addition to adding another competitor by cutting through the red tape so LightSquared can launch, there is some additional low hanging fruit that the Commission could grasp to make more spectrum available.

The FCC has the opportunity, through a rulemaking process it began last week, to expedite approval for DISH Network to deploy recently acquired satellite spectrum.

DISH originally requested a routine waiver of FCC rules so it could utilize 40 MHz of satellite spectrum to offer less expensive cell service to customers. After much pressure from larger incumbent carriers, the FCC denied the request. The waiver would have allowed DISH customers to use handsets like those of any other wireless carrier, helping them keep prices down and allowing them to more effectively compete with Verizon and AT&T.

The rulemaking proceeding begun last week is a renewed opportunity to do the right thing, but the FCC needs to move expeditiously on this proceeding. Any delay slows the arrival of needed competition.

Fortunately despite some murmurs from those trying to block DISH from the market, an FCC official has acknowledged there are no interference concerns with DISH’s planned network. But the spectrum crunch is real, and additional spectrum along with more competition helps – especially as major mobile carriers institute data caps.

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